From its beginning as an experiment, crypto trading is now one of the reckoning forces in the world of technology, with a market cap of $3 trillion according to Bloomberg. But even with its widespread popularity, you must learn the nitty-gritty before jumping in to invest as the market is very volatile.
Several factors will influence your choice of crypto, they include:
Guidelines of the coins
Investment in currency
Purpose of the coin.
Using these factors as a yardstick to guide your choice is good, but without the right exchange, you can’t enjoy all that cryptocurrency has to offer.
A crypto exchange is a digital platform where cryptocurrency, altcoins, and other digital assets are purchased or sold. You could liken it to a marketplace. The only difference it has with the conventional market is digitality.
Meanwhile, there are over 200 exchanges globally, each having different features and services. With the higher rate of crypto scams, one must be careful with what trading they use. As there is a mad rush into cryptocurrency, the need for proper guidance cannot be overemphasized. However, we cannot cover all that investors need to know. But if you are enthusiastic about learning more about the crypto exchange, read on to the end.
Types of Available Crypto Exchanges
There are three types of exchange:
Decentralized Exchanges are a direct contrast from Centralized Exchanges, as they don’t have a central authority. It allows the automation of trades with smart contracts and apps. Uniswap is one of the most popular decentralized crypto exchanges.
Known as the traditional exchanges, centralized exchanges have principal authority, and the majority of times, it is the company that established it. Here, trades are not automated, and you are entirely in control of your crypto; instead, someone helps you handle it. It provides an order book, and there are tools for technical analysis for some advanced exchanges. Centralized exchanges are user-friendly and have an excellent user interface. Additional packages include DeFi, trading different pairs, and swift customer response. The drawback of centralized exchanges is that they are susceptible to attack, as we saw in the case of Mt.Gox and Coincheck. The top centralized exchanges are; Binance and Coinbase.
Hybrid exchanges are a blend of centralized and decentralized exchanges. Though still in their infancy, famous examples are Qurrex and Nash. They process transactions faster and more securely, but you don’t have complete control of your crypto.
Factors To Consider When Choosing An Exchange
Several factors will influence your choice of exchange:
Genuine: you must ascertain if the platform is trustworthy.
Supported coins: look into whether your choice of crypto is available as different exchanges offer different coins.
Security: check for the previous history of hacked or compromised wallets.
Laws and policies: checking this is very important, based on active policies and regulations on cryptocurrency, you must know whether the laws in your state or country permit the use of the exchange. If an exchange is prohibited, you have to stay alert as there are always reviews of policies. On the other hand, if you use an international exchange, you must keep track of any changes that might make the exchange illegal.
Interest and Rewards: Some exchanges give rewards and interest to account holders to spur them to save more on their platform. They give up to 10% on some coins. Unlike traditional banks, the only drawback is that the FDIC does not back them. So, if the exchange fails, there is no guarantee that they will refund your money.
Customer Support: the majority of crypto exchanges do not have good customer service, which is unfortunate if you need to call for assistance if anything goes wrong with your account. If you come across an exchange with active customer service, you might want to jump on it as it would be a significant benefit in your cryptocurrency experience.
Fees: as risk decreases and competition increases, charges by crypto exchanges might become standardized and may likely drop across all exchanges. But in the meantime, there is a significant disparity in costs.
Wallets: this feature is not available in all exchanges. It is most convenient to have your wallet and trade on the same platform. However, if you have a substantial amount of cryptocurrency, you should consider using a cold wallet for extra security.
Option to buy and sell: you must look for a platform with a payment system that favors you. Some exchanges support credit cards, debit cards, direct transfer from banks, and direct trade between Crypto others do not. You may decide to do it directly from your bank to fund your account. So, you must search for a platform that supports your Fiat currency.
Your cryptocurrency journey will be much easier as long as you know which platform. However, according to coinmarketcap.com Binance and Coinbase have the highest trade volume and have proven over the years to be reliable.